3 - Comparative productivity performance in market services

Summary

Introduction

Chapter 2 has established that services played a dominant role in the changing patterns of comparative labour productivity performance at the aggregate level. In particular, over the long run, Britain was overtaken at the aggregate level because of a loss of labour productivity leadership in services. It was also pointed out in chapter 2, however, that many economists and economic historians worry about measurement issues in services. This chapter therefore takes a more disaggregated look at productivity performance in services, focusing on market services, where the problems of measuring output independently of inputs are less important. The patterns are reassuring, showing that the British loss of productivity leadership in services reflects changes within the main market sectors, and is not just some statistical artefact arising from changes in the importance of non-market services, where measurement problems are most severe.

The US/UK comparison

Table 3.1 provides time series projections of comparative US/UK labour productivity levels in the key market service sectors of transport and communications, distribution, and finance with professional and personal services. These projections are based on 1937 benchmarks, which are shown at a more disaggregated level in table 3.2, together with benchmarks for additional years. These benchmarks for other years can be used as additional cross-checks on the time series projections, as well as providing a more disaggregated picture of comparative productivity levels.